India’s foundry industry, which is the third biggest globally in terms of production capacity (10 million tonnes in FY16) after China (40 million tonnes) and the US (11 million tonnes), has an installed capacity of 15 million tonnes per year.
Foundry Industry has a turnover of approx. USD 19 billion with exports approx. USD 2.5 billion. However, Grey iron castings have the major share i.e. approx 68% of total castings produced.
The Indian foundry industry manufacturers metal cast components for applications in Auto, Tractor, Railways, Machine tools, Sanitary, Pipe Fittings, Defence, Aerospace, Earth Moving, Textile, Cement, Electrical, Power machinery, Pumps / Valves, Wind turbile generators etc.
As per market reports India foundry market is to grow by more than 10% in 2017-2021 with Electrosteel Castings, Hinduja Foundries, Nelcast & Rail Wheel Factory dominating.
Industry players believe new opportunities from the government’s boost to infrastructure projects such as metro rail will ensure utilization of the idle capacity and the addition of another 15 million tonnes capacity in the next five to 10 years. There are about 4,600 units engaged in forging, these units are located in 19 major foundry clusters across the country and collectively exported to the tune of USD2.7 billion, besides producing finished components worth USD2.5 billion in 2015-16. The industry has a turnover of USD18 billion.
Nelcast is India’s largest producer of Ductile Iron Castings and a leading producer of Grey Iron Castings. Their products cater to the Global Automotive, Tractor, Construction, Mining, Railways and General Engineering sectors.
|In an email interview with Steel360 P.Vijaya Bhaskar Reddy, Deputy Managing Director, Nelcast Limited, Chennai told us about the growing foundry market. Excerpts of the interview follow.
Q. How big is the foundry market in India? Where does Nelcast stand in the foundry market – in terms of capacity & growth?
A. India is one of the largest producers of Iron castings in the world. Nelcast is a leading producer of Ductile Iron castings for Automobiles in India. However the growth is not significant in the last three years. It is around 3% per year.
Q. Has your demand increased after the government policy especially demonetization. Can you detail with sector- specific growth and also the non performing sectors.
A. The demand has not increased after demonetization. The demand is likely to increase with government thrust on infrastructure.
Q. The government expenditure on infrastructure has increased. Has this benefitted your company, can you detail the growth?
A. We are yet to see the actual growth on ground, due to the government push on infrastructure.
Q. In detail, tell us about your company’s export demand. Are you more focused on the Indian market or exports?
A. Our focus has been on Indian market. Now we are pursuing the export markets vigorously. Our exports have gone up by 50% in the last financial year, to reach INR 37 crores. We expect similar growth in the next few years.
Q. Can you detail us what is the Nelcast ground level demand in Railways?
A. We are supplying mainly metro rail projects and there steady growth in this segment. We are the leading source of ductile Iron base plates, in this segment.
We are not supplying anything to regular railways.
Q. What are the challenges your company face due to the volatility of raw material especially metcoke?
A. Our dependence on metcoke is negligible. Hence we are not affected much, with the volatility of met coke price. Any volatility in scrap market will have impact on us. When the scrap prices goes up, the foundries supplying to OEMs, may not be able to pass on the costs to the customers immediately. There will be always a time lag of 3 months and also depends on the demand for castings in the market. Hence when there is sudden increase in the scrap prices, it will have short term, adverse impact on foundries’ margins.
Q. Where do you see India & your company in the coming year in the foundry sector ?
A. India will continue to be one of the leading producers of castings in the world. We supply mainly to Medium and Heavy Commercial vehicles and Tractors.
The M&H CV segment is expected to do well from second quarter onwards. The tractor segment is also expected to do well with last year good monsoon and estimated normal monsoon in the current year. With these factors, we expect 10-15% growth in the current year.
Source: Steel 360 Magazxine May’17 Issue